Canary Wharf (BP4) T1 Ltd v European Medicines Agency

JurisdictionEngland & Wales
JudgeMr Justice Marcus Smith
Judgment Date20 February 2019
Neutral Citation[2019] EWHC 335 (Ch)
Docket NumberClaim No: PT-2018-000505
CourtChancery Division
Date20 February 2019
Between:
(1) Canary Wharf (BP4) T1 Limited
(2) Canary Wharf (BP4) T2 Limited
(3) Canary Wharf Management Limited
Claimants
and
European Medicines Agency
Defendant

[2019] EWHC 335 (Ch)

Before:

THE HONOURABLE Mr Justice Marcus Smith

Claim No: PT-2018-000505

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

CHANCERY DIVISION

PROPERTY TRUSTS AND PROBATE LIST

Rolls Building

7 Rolls Building

Fetter Lane

London EC4A 1NL

Ms Joanne Wicks, QC, Lord Anderson of Ipswich, KBE, QC, Mr Jonathan Chew and Ms Zahra Al-Rikabi (instructed by Clifford Chance LLP) for the Claimants

Mr Jonathan Seitler, QC, Mr Thomas de la Mare, QC, Ms Emer Murphy and Mr James Segan (instructed by DLA Piper LLP) for the Defendant

Hearing dates: 16, 17, 18, 21, 22, 23, 24, 25 and 28 January 2019

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

CONTENTS

A.

INTRODUCTION

Paragraph 1

(1)

The background to these Proceedings

Paragraph 1

(2)

Issues between the parties

Paragraph 7

(3)

The event said to frustrate the Lease lies in the future

Paragraph 13

(4)

Structure of this Judgment

Paragraph 20

B.

THE ENGLISH DOCTRINE OF FRUSTRATION

Paragraph 21

(1)

Central propositions

Paragraph 21

(2)

The juridical basis for the doctrine of frustration

Paragraph 25

(3)

“It was not this that I promised to do”

Paragraph 28

(4)

A multi-factorial approach

Paragraph 39

(5)

Types of frustrating event

Paragraph 41

(6)

Self-induced frustration

Paragraph 43

C.

THE MATERIAL FACTS

Paragraph 47

(1)

The evidence before the court

Paragraph 47

(2)

The nature of the Property and the manner in which the Property and the Premises came to be procured

Paragraph 56

(3)

The nature of the EMA

Paragraph 62

(a)

Establishment

Paragraph 63

(b)

Personality

Paragraph 64

(c)

Capacity

Paragraph 66

(d)

An intra-Union function

Paragraph 68

(e)

Funding and expenditure

Paragraph 70

(f)

Liability of the EMA

Paragraph 77

(g)

Protocol 7

Paragraph 79

(h)

Location of the EMA's headquarters

Paragraph 87

(4)

The provisions of the Lease

Paragraph 92

(5)

The EMA's attempts to dispose of the Premises

Paragraph 94

D.

ISSUES RELATING TO THE EMA'S LEGAL CAPACITY IN RELATION TO THE LEASE ARISING OUT OF THE FRUSTRATING GROUNDS AND THE EMA'S SELF-STANDING POINT

Paragraph 96

(1)

Introduction: the EMA's case

Paragraph 96

(2)

My approach to the EMA's case

Paragraph 101

(3)

Anterior questions

Paragraph 102

(a)

The applicable law

Paragraph 102

(i)

Does a question of private international law arise at all?

Paragraph 102

(ii)

Characterisation

Paragraph 108

(iii)

Applicable law

Paragraph 110

(b)

A preliminary reference?

Paragraph 113

(c)

Capacity and vires in European Union law

Paragraph 126

(4)

Issues regarding the EMA's legal capacity to act in relation to the Lease

Paragraph 130

(a)

Introduction

Paragraph 130

(b)

Scenario 1

Paragraph 132

(i)

Effect on the EMA's Protocol 7 protections

Paragraph 132

(ii)

Potential loss of the EMA's protection under Article 72 of the 2004 Regulation

Paragraph 136

(iii)

Capacity to hold or deal with immovable property outside the territory of the European Union

Paragraph 140

(iv)

Capacity of the European Union to designate the EMA's headquarters outside the territory of the Member States of the European Union

Paragraph 146

Introduction

Paragraph 146

A rule of public international law

Paragraph 149

A rule of European Union law

Paragraph 156

(v)

The obligation to pay rent

Paragraph 159

(vi)

Summary of conclusions

Paragraph 160

(c)

Scenario 3

Paragraph 161

E.

FRUSTRATION OF THE LEASE IN THE CASE OF SCENARIO 1

Paragraph 166

(1)

Introduction

Paragraph 166

(2)

Frustration by supervening illegality

Paragraph 169

(a)

Approach

Paragraph 169

(b)

Supervening illegality in the cases

Paragraph 173

(c)

The significance of the relevantly applicable law

Paragraph 177

(i)

Introduction

Paragraph 177

(ii)

Capacity conferred by English law

Paragraph 182

(iii)

Applicable law to the question of frustration and the English law approach to supervening illegality under the law of a different law district

Paragraph 186

(d)

Capable of frustrating the lease?

Paragraph 190

(i)

London and Northern Estates Company v. Schlesinger

Paragraph 190

(ii)

The present case

Paragraph 196

(iii)

Self-induced frustration

Paragraph 201

(e)

Conclusions

Paragraph 208

(3)

Frustration of common purpose

Paragraph 209

(a)

Approach

Paragraph 209

(b)

Matters relevant to the parties' expectations on 5 August 2011

Paragraph 211

(i)

Foreseeability of the United Kingdom's withdrawal from the European Union

Paragraph 211

Introduction

Paragraph 211

Foreseeability

Paragraph 215

(ii)

The “bespoke” nature of the Property and the Premises

Paragraph 217

(iii)

Protocol 7

Paragraph 221

(iv)

The length of term and the absence of a break clause

Paragraph 223

(v)

Insurance

Paragraph 227

(vi)

The Allen & Overy letter

Paragraph 229

(vii)

The EMA's budgetary process and the scrutiny of the financial implications of the Agreements (including the Annex 15 Draft Lease)

Paragraph 231

(c)

Nature of the supervening event

Paragraph 234

(d)

“Radically different”

Paragraph 235

(i)

Application of the test

Paragraph 235

(ii)

The Lease

Paragraph 239

(iii)

Was there a common purpose in this case?

Paragraph 244

(iv)

Relative justice

Paragraph 249

F.

FRUSTRATION OF THE LEASE IN THE CASE OF SCENARIO 3

Paragraph 251

G.

THE EMA'S SELF-STANDING POINT

Paragraph 254

H.

CONCLUSIONS AND DISPOSITION

Paragraph 252

Mr Justice Marcus Smith

A. INTRODUCTION

(1) The background to these Proceedings

1

. The European Medicines Agency (the “EMA” 1) is an agency of the European Union. It holds an underlease dated 21 October 2014 (the “Lease”) of part of 25–30 Churchill Place, Canary Wharf (the “Property”) for a term of 25 years (the “Term”). The Claimants – collectively “CW” – are the landlords of the Lease and the management company for the Canary Wharf estate. It is unnecessary to differentiate between the Claimants for the purposes of this judgment. I shall refer to the property leased to the EMA pursuant to the Lease as the “Premises”.

2

. By a letter dated 2 August 2017, the EMA wrote to CW stating that:

“Having considered the position under English law, we have decided to inform you that if and when Brexit occurs, we will be treating that event as a frustration of the Lease.”

3

. These proceedings (the “Proceedings”) were commenced because CW took the view that the commercial uncertainty created for CW and their lenders by this contention required early resolution. For its part, the EMA did not dissent from the importance of an early resolution of the Proceedings. By an order dated 2 August 2018, Mann J ordered that – so far as practicable – these proceedings should be heard, and preferably judgment delivered, by 29 March 2019.

4

. The Proceedings were commenced under CPR Part 8. The relevant part of the CPR Part 8 Claim Form states that CW are seeking:

“…a declaration that the withdrawal of the United Kingdom from the European Union and/or the relocation of the [EMA] (whether inside or outside of the United Kingdom) will not cause [the Lease] to be frustrated and that the [EMA] will continue to be bound by all of its covenants and obligations in the Lease and all related documents including (but not limited to) payment of the full rents under the Lease throughout the Term of the Lease unless released by law upon a lawful assignment of the Lease properly made in accordance with its terms…”

5

. It will be necessary to set out precisely why the EMA contends that the Lease will be frustrated. The reference to the relocation of the EMA in the Part 8 Claim Form is a reference to the EMA's contention that one consequence of the United Kingdom's withdrawal from the European Union is the need for the EMA to re-locate away from the United Kingdom, with the corollary that its (present) London headquarters would no longer be needed. The EMA's letter of 2 August 2017 put the point thus:

“It would be unprecedented and incongruous for an EU body such as the [EMA] to be located in the UK and continue to pursue its mission in London after the UK has left the EU. Such circumstances were simply not contemplatable at the time of entering into the Lease.”

6

. By his order of 2 August 2018, Mann J ordered that the EMA file and serve points of claim providing particulars of the EMA's case on frustration in response to CW's claim for a declaration. Such points of claim – together with a counterclaim for declarations of its own – were duly served by the EMA (the “Points of Claim”). 2 CW responded by way of “Points of Response”. 3

(2) Issues between the parties

7

. The EMA contends that the Lease is frustrated for the following reasons (which are relied upon by the EMA...

To continue reading

Request your trial
4 cases
  • Salam Air SAOC v Latam Airlines Group SA
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 8 September 2020
    ...EWHC 2957 (Comm). Bolivinter Oil SA v Chase Manhattan Bank NA [1984] 1 WLR 392. Canary Wharf (BP4) T1 Ltd v European Medicines Agency [2019] EWHC 335 (Ch). Costain International v Davy McKee (London) Ltd (CAT 1009, 26 November 1990). Czarnikow-Rionda Sugar Trading Inc v Standard Bank London......
  • Bank of New York Mellon (International) Ltd v Cine-UK Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 27 July 2022
    ...or motivation at all. 119 He relied upon the decision of Marcus Smith J in Canary Wharf (BP4) T1 Ltd v European Medicines Agency [2019] EWHC 335 (Ch); [2019] L.&T.R. 14. The issue in that case was whether a lease held by the European Medicines Agency of premises in London used as its headq......
  • Canary Wharf (BP4) T1 Ltd v European Medicines Agency
    • United Kingdom
    • Chancery Division
    • 1 March 2019
    ...various matters consequential upon the judgment in this matter that I handed down on 20 February 2019 under Neutral Citation Number [2019] EWHC 335 (Ch) (the “Judgment”). This ruling takes the Judgment as read, and adopts the terms and abbreviations used in the Judgment. Indemnity costs 2 ......
  • Sunbroad Holdings Ltd v A80 Paris Hk Ltd ( Formerly Known As A80 Anoufa Paris Hk Ltd) And Another
    • Hong Kong
    • Court of First Instance (Hong Kong)
    • 3 June 2021
    ...V of the Tenancy Agreement. Ms Law submits (and it is not disputed by Mr Hon) that Canary Wharf (BP4) T1 Ltd v European Medicines Agency [2019] EWHC 335 is an authority for the proposition that the right (or the lack thereof) to assign or sublet by the Tenant is relevant to the doctrine of ......
23 firm's commentaries
1 books & journal articles
  • Making Lease Payments a Lessor Problem
    • United States
    • University of Georgia School of Law Georgia Law Review (FC Access) No. 57-1, 2022
    • Invalid date
    ...render it a thing radically different from that which was undertaken by the contract."). 53. See Canary Wharf v. Eur. Meds. Agency [2019] EWHC 335 (Ch) ¶ 24 https://www.iclr.co.uk/document/2019000444/transcriptXml_2019000444_2019031210462673/html (restating five propositions identified by L......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT